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CAMBRIDGE INTERNATIONAL EXAMINATIONS
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Cambridge International Advanced Level
MARK SCHEME for the October/November 2014 series
9708 ECONOMICS
9708/41
Paper 4 (Data Response and Essays – Supplement),
maximum raw mark 70
This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of
the examination. It shows the basis on which Examiners were instructed to award marks. It does not
indicate the details of the discussions that took place at an Examiners’ meeting before marking began,
which would have considered the acceptability of alternative answers.
Mark schemes should be read in conjunction with the question paper and the Principal Examiner
Report for Teachers.
Cambridge will not enter into discussions about these mark schemes.
Cambridge is publishing the mark schemes for the October/November 2014 series for
most Cambridge IGCSE®, Cambridge International A and AS Level components and some
Cambridge O Level components.
® IGCSE is the registered trademark of Cambridge International Examinations.
Page 2
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
Section A
1
(a) Identify three reasons why temporary workers in India are disadvantaged compared
with permanent workers.
[3]
Temporary workers are paid half, or lower than, the permanent workers’ rate, no/few extra
benefits, minimum wage not applicable; do not have a permanent contract.
(b) Is the evidence given sufficient to support the statement that ‘most manufacturing
firms in India are small’?
[4]
Firms with fewer than 10 workers high %, but this is a % and not an absolute amount; also, this
only relates to permanent staff, not total numbers employed; further, do not know if they are
manufacturing firms. Table gives ‘all’ firms. Small only relates to employment and not to output
or turnover.
(c) Distinguish between fixed cost and variable cost and consider how temporary workers
and managers would be classified.
[3]
Fixed cost does not change with output, variable cost does. Temporary workers are a variable
cost; managers are a fixed cost – allow variable if candidates refer to the long-run.
(d) Discuss whether the payment of low wages could be good for India’s economy.
[10]
Low wages means lower income, lower spending, lower demand, lower growth. However, there
may be more demand from firms for workers, including foreign firms, which will increase
employment and spending. Global competitiveness is increased. Low wages mean cheaper
costs for business, maybe higher profits and more investment. Overall effect on the economy is
uncertain as a theoretical discussion but India is among the group of emerging nations, which
would indicate that it might contribute to a beneficial result. Up to 6 marks for one side; reserve
1 mark for conclusion.
© Cambridge International Examinations 2014
Page 3
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
Section B
General Comments for section B:
The essay questions carry a maximum mark of 25. Try to use the whole mark range. If there is any
doubt in your mind, give the benefit of doubt to the candidate.
The difference in grades should be assessed on the ability of the candidate to demonstrate the
various objectives of the examination listed in the syllabus and not purely on the ability to itemise
further facts from the content of the syllabus. Marks should be awarded for the ability to demonstrate
that aim (b) of the syllabus has been achieved as well as aim (a) - which refers to content knowledge.
It is the objective of the examination, as listed in the syllabus, to assess both these aims.
An overall guide for marks for individual questions is given below; these are from a total of 25. They
may be applied proportionally (of course) to parts of questions where the total is less than 25.
Mark 1–9
(Linked to level one in individual question notes).
1–5
where the answer is mostly irrelevant and only contains a few valid points made incidentally
in an irrelevant context. There will also be substantial omissions of analysis.
6–9
where the answer shows some knowledge but does not indicate that the meaning of the
question has been properly grasped. Basic errors of theory, or an inadequate development of
analysis may be evident.
Mark 10–13 (Linked to level two in individual question notes).
10–11 where there is evidence of an ability to identify facts or some ability at graphs and/or a fair
ability to apply known laws to new situations.
There should be an accurate (although) undeveloped explanation of the facts relating to the
question together with an explanation of the theory, and evidence of some ability to
discriminate and form elementary judgements. Do not expect a clear logical presentation.
There will not be much evidence of the ability to recognise unstated assumptions, nor to
examine the implications of a hypothesis, nor of the ability to organize ideas into a new unity.
12–13
where the answer has a more thorough relevance to the question but where the theory is
incompletely explained.
Mark 14–17 (Linked to level 3 in individual question notes).
14–15 where there is a good knowledge of the facts and theory of the question, clear evidence of
the ability to use the facts and theory with accurate reference to the question that may have
presented the candidate with a novel application.
There should also be evidence, where appropriate, of the ability to examine the implications
of the question and an attempt to distinguish between facts and value judgements.
Clear statements, supported by reasoned arguments should be given and there should be
some attempt at a conclusion to the question. There should be a reasoned structure to the
whole answer. Do not expect too many extra illustrative points which are not explicitly
referred to in the question, do not expect too much critical comment on unstated
assumptions
16–17
for an answer showing a well-reasoned understanding of the question's requirements and of
the relevant theory; the analysis should be sound though the illustration and development
may not be very full.
© Cambridge International Examinations 2014
Page 4
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
18–25
18–20
(Linked to level 4 in individual question notes).
where there is a thorough knowledge of the facts and theory with an excellent ability to
describe, explain or analyse this in a precise, logical, reasoned manner. There should be an
ability to query some of the assumptions in the question and clear evidence of an ability to
distinguish between fact and value judgements and to draw some conclusions on the matter
being discussed. Conclusions should be formed and expressed within a sound structured
answer so that the whole is well presented. New illustrations and apposite examples should
be introduced as further evidence of an ability to recognise the principles of the question and
their application to relevant current situations.
21–25
for an answer which, given the time constraint, could not be improved significantly: it will
have clear analysis, ample illustration and a good attempt at considered evaluation.
Be positive in your marking awarding marks for what is there without being too much
influenced by omissions. Marks should not be deleted for inaccuracies.
Corresponding marks for sub-sections.
Total Mark 12
1
1–4
2
5–6
3
7–8
4
9–12
Total Mark 13
1–4+
5–6+
7–8+
9–13
© Cambridge International Examinations 2014
Page 5
2
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
(a) Analyse whether there is a difference between:
•
the way the effects of an increase in price can be represented using a budget line,
and
•
the way the effects of an increase in price can be represented using a demand
curve based on marginal utility theory.
[12]
Explanation of budget line and how an increase in price of one good causes the budget line to
pivot. Budget lines alone cannot tell what happens to quantity demanded, although they may
show a split between income and price effects. Explanation of utility theory and the link to a
movement along a demand curve which can show how the quantity demanded changes.
Should candidates understand the analysis but refer to a price decrease, not an increase, award
up to L2 maximum.
[12]
L4 For a good analysis with a reasoned comment of budget lines and demand curves/utility
with a clearly structured answer and a conclusion.
[9–12]
L3 For a fair analysis but undeveloped answer or a more developed answer on either
budget lines or demand/utility. A conclusion should be drawn.
[7–8]
L2 For a limited but acceptable attempt to analyse the link to the theory but with
inconclusive or unconvincing discussion and no overall conclusion.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies. Errors of
theory or omissions of analysis will be substantial.
[1–4]
(b) Discuss what is likely to happen to the equilibrium price and output if a perfectly
competitive firm were to become a monopolist.
[13]
Perfect competition firm takes price given by the market demand and supply. Monopoly does
not need to do this and can fix price. Market price is likely to be higher, market quantity is likely
to be lower with monopoly – but this need not be so if there are economies of scale.
[13]
L4 For a sound discussion and explanation with clear understanding of the principles
involved and a good structure to the answer.
[9–13]
L3 For a competent discussion but more limited explanation, maybe of the changes in the
market situation rather than the firm but still with a reasonable structure to the answer.
[7–8]
L2 For a more limited discussion probably explaining each structure briefly or a lack of link
to the market and curve and with a poorer structure to the answer.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies. Errors of
theory or omissions of analysis will be substantial.
[1–4]
© Cambridge International Examinations 2014
Page 6
3
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
In the recession of 2012, some European firms declared that their profits were not as high
as in the previous year.
(a) Explain how, in theory, a firm might try to increase its profits.
[12]
Explanation of maximum profit analysis. Candidates could specify not just where maximum
profits are but what a firm should do to achieve this. Such action would depend upon the
assumed starting point. A discussion of how this might be achieved in alternative market
structures would be valid.
[12]
L4 For a good explanation of the link to both profit and output. Answer will clearly specify a
change rather than just a maximum profit output. Some mention of alternative market
structures to try and increase profits should be mentioned to achieve 11/12.
[9–12]
L3 For a competent analysis but with a weaker structure to the answer. A clear indication of
a change should be given although probably no mention, or very brief mention of
alternative market structures.
[7–8]
L2 For a more limited analysis with weak explanations.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies. There will
be errors of theory or omissions of analysis.
[1–4]
(b) Discuss what alternative objectives a firm might have apart from profit maximisation.
[13]
Discussion of the alternative objectives, influence in the market, behavioural theories,
managerial theories, balancing of aims of different parts of the company, pricing according to
other firms in the market rather than according to profit maximisation.
[13]
L4 For a sound discussion with clear understanding of the principles involved.
L3 For an accurate reference to the question but with a more limited discussion.
[9–13]
[7–8]
L2 For a discussion which contains minor errors or an undeveloped comment, not necessarily
logically presented.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies and errors
of theory.
[1–4]
© Cambridge International Examinations 2014
Page 7
4
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
(a) Employment is likely to decrease if wages fall.
Employment is likely to decrease if wages rise.
Consider whether these apparently contradictory statements are true in the analysis
of the demand for and supply of labour.
[12]
In the factor market the S curve shows what would be supplied at a given wage. From the
workers’ perspective a fall in wages results in workers being less willing to supply labour – first
statement true. A rise in wages would result in workers being more willing to supply labour (until
the backward supply is reached) – second statement untrue. (Both are movements along the S
curve).
However, where the equilibrium occurs/depends on demand as well as supply, if wages rise,
employers are likely to demand less labour and employment is likely to decrease. Second
statement true if the factor market and not the individual worker is considered.
[12]
L4 For a good explanation, and conclusion, of the change on the individual and the market
with relevant comparison.
[9–12]
L3 For either a competent explanation of the effect on the individual or on the market, or a
weaker explanation involving both aspects.
[7–8]
L2 For a limited attempt probably dealing with one aspect only, or for dealing with wages
only and no mention of employment.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies. There will
be errors of theory or omissions of analysis.
[1–4]
(b) Discuss how wage rates might differ between a perfect and an imperfectly competitive
market for labour.
[13]
Discussion of the level of wages in perfect and imperfect competition. Wages likely to be
lower in imperfect competition unless market level is changed by government or union. [13]
L4 For a sound discussion clearly explaining the differences.
[9–13]
L3 For a competent discussion with a weaker comparison of the two market structures. [7–8]
L2 For a general discussion with no real conclusion of the differences.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies. Errors of
theory or omissions of analysis will be substantial.
[1–4]
© Cambridge International Examinations 2014
Page 8
5
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
An economist stated ‘you cannot encourage economic growth, and cut spending and
increase taxes at the same time’. (Source: The Times. 2011)
(a) Explain the costs and benefits of economic growth.
[12]
Explanation of the extent to which growth would either increase income, standards of living,
economic development or destroy existing environments, cause overcrowding, congestion,
pollution, negative externalities. A consideration of the short-run/long-run position and/or a
comment on the differences in developed/developing countries could be given.
[12]
L4 For a reasoned and well argued explanation with accurate development of the analysis
referring to both benefits and costs.
[9–12]
L3 For a clear but undeveloped explanation but one which still deals with both benefits and
costs, including economic and social effects.
[7–8]
L2 For a limited attempt to consider the theory with a concentration on the economic
indicators reflecting output etc. only.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies. Errors of
theory or omissions of analysis are substantial.
[1–4]
(b) Discuss whether economic analysis can be used to support the statement of the
economist.
Discussion of the negative multiplier effect of reducing government expenditure and
increasing taxes and its effect on national income.
[13]
[13]
L4 For a sound discussion with good explanation of the analysis and a clear understanding
of the principles involved with a reasoned conclusion. If there is no critique then 10
marks maximum.
[9–13]
L3 For a competent comment but lacking development.
[7–8]
L2 For a limited discussion of the analysis but with only very brief development of the ideas.
No multiplier: level 2 maximum.
[5–6]
L1 For an answer which has some basic correct facts but includes irrelevancies. Errors of
theory or omissions of analysis will be substantial.
[1–4]
© Cambridge International Examinations 2014
Page 9
6
Mark Scheme
Cambridge International A Level – October/November 2014
Syllabus
9708
Paper
41
Government economic policy should be directed to increasing the standard of living –
employment, health, education and a sustainable environment. It should not concentrate
on fixing prices, raising taxes and regulating bank lending.
Discuss whether there is any truth in this statement.
[25]
Candidates should debate what the main government policy should be. They should question
whether these, which may be expressed in the traditional economic macro aims of governments
– price stability, growth, balance of payments problems – necessarily imply that there is no
connection with employment, health, education, environment. Achievement of these policies may
well be to use the methods mentioned or may be to use other methods.
[25]
L4 For a reasoned and clear discussion with accurate development of an argument based on an
understanding of theory. There will be good links to the statement together with a conclusion.
[18–25]
L3 For a clear description together with limited elaboration of the analysis or imprecise links to
the statement. There will be some discussion but the evaluation will not be fully developed or
extensive. A conclusion will be presented.
[14–17]
L2 For a correct explanation but weak or ill-explained links to the statement. The explanation will
be undeveloped; there will be some attempt at analysis but only limited evaluation with no
conclusion.
[10–13]
L1 For an answer which shows some knowledge but does not indicate that the question has
been fully grasped. The answer will have some correct facts but include irrelevancies. Errors
of theory or omissions of analysis will be substantial.
[1–9]
7
The transfer of some functions of the public sector to the private sector is the best way of
ensuring efficiency. It is, therefore, worthwhile.
Is this an argument with which you agree?
[25]
Explanation of efficiency and a discussion of the relative merits of the private market and public
sector. The private sector maybe competitive and possibly more productively efficient but there
will be problems of market failure, information, externalities, merit goods and no public goods.
The quote does specify ‘some functions’. Candidates could consider which functions might be
appropriate for a transfer.
L4 For a sound explanation of efficiency and a good discussion of the relative merits of each
sector. A conclusion should be given with some reference to which functions may be better in
the private sector.
[18–25]
L3 For a competent explanation of efficiency but briefer discussion of the relative merits of each
sector and no comment on which functions might be appropriate for the private sector. There
should still be a conclusion.
[14–17]
L2 For a more limited general description, rather than an analytical discussion with little attempt
at evaluation and no conclusion.
[10–13]
L1 For an answer which has some basic correct facts but includes irrelevancies. Errors of theory
or omissions of analysis will be substantial.
[1–9]
© Cambridge International Examinations 2014